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Berkshire Hathaway’s cash pile hits new record as Buffett dumps stocks

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Berkshire Hathaway’s cash pile hits new record as Buffett dumps stocks

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Berkshire Hathaway’s cash pile swelled to a record $189bn in the first quarter of 2024 as Warren Buffett’s sprawling conglomerate continued to dump stocks, including Apple, one of its largest positions.

The figure underscores the difficulty the billionaire investor and his team have had in trying to find worthwhile investments, as well as the relative allure of the high yield on US government debt.

The company on Saturday disclosed it had sold just under $20bn-worth of stocks in the first three months of the year, buying $2.7bn over the same period. As a result the value of its stock portfolio slipped to $336bn, from $354bn at year-end.

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The filing with US securities regulators indicated that Berkshire had sold a significant portion of its stake in Apple, which had become a core holding for the Omaha-based business since one of Buffett’s deputies first invested in 2016.

The company said its position in the iPhone maker was worth $135.4bn in the first quarter, down from $174.3bn at the end of 2023, suggesting it had sold more than 100mn shares in the company at the start of the year. Berkshire started to pare its holdings in Apple in late December, selling roughly 10mn shares.

Buffett has long heaped praise on Apple’s management team and in 2022 he described the company as one of Berkshire’s “four giants”, alongside its insurance operations, the BNSF railroad and its energy and utility business Berkshire Hathaway Energy.

Tim Cook, Apple’s chief executive, told CNBC that Buffett had told him about the stock sales on Friday. Cook added that it was still “a privilege to have Berkshire as a shareholder”.

The figures come as Berkshire shareholders gather in Omaha, Nebraska, for the company’s annual meeting, dubbed the Woodstock of capitalism. It is the first time Buffett will take to the stage since his longtime business partner Charlie Munger died in November.

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Berkshire reported solid earnings in the first quarter, driven almost entirely by improvements in its insurance businesses as well as a boost from higher interest rates. Operating profits across the company jumped 39 per cent from the year before to $11.2bn.

The company disclosed that its auto insurer Geico had passed along higher rates to customers and had suffered fewer claims, lifting its results. The unit has scaled back its footprint since the pandemic after it suffered a period of losses.

Line chart of Total return (%) showing Berkshire shares have largely kept pace with the  broad market

Auto insurers across the US had struggled with the high replacement costs of new cars, exacerbated by supply chain issues and surging inflation.

Geico, which is led by one of Buffett’s top investment deputies, cut millions of policies in a drive to return to profitability. The move has been successful. Pre-tax profits at Geico more than doubled from a year ago to $1.93bn. The unit also signalled its retrenchment could be near its end, saying that “the rate of decline” had slowed and it was winning new business.

The company has also benefited from the US Federal Reserve’s decision to raise interest rates in a bid to quell inflationary pressures. Berkshire said it earned $1.9bn in the quarter in interest income from its cash pile, which is largely invested in short-term Treasuries.

Over the past year, it has earned almost $7bn on that portfolio.

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Column chart of Quarterly investment income ($bn) showing Higher interest rates have been a boon to Berkshire Hathaway

Overall, Berkshire said it generated a net profit of $12.7bn in the first quarter, down 64 per cent from $35.5bn a year earlier.

Buffett has long discouraged his shareholders from relying on the company’s net income figures — calling them “meaningless” — as they are affected by swings in value of its stock portfolio from quarter to quarter. It can result in huge losses or profits that do not reflect the underlying business performance.

Berkshire’s results are typically pored over by investors, given the company employs nearly 400,000 people and touches almost every part of the US economy. The results were generally upbeat and pointed to an improving US outlook.

Sales at Precision Castparts, an aeroplane parts manufacturer that supplies Boeing, jumped 10 per cent to $2.5bn. Sales at Berkshire’s home building group, which includes the modular home builder Clayton Homes and roofing maker Johns Manville, also rose.

The BNSF railroad’s revenues fell 4.1 per cent, almost entirely driven by lower shipments of coal. The unit, which has more than 32,000 miles of track criss-crossing the US, said it had shipped more consumer and agriculture products than previously.

Shares of Berkshire have climbed 11 per cent this year, outpacing the 8 per cent total return of the S&P 500. Berkshire has not paid a dividend since the 1960s.

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

Trump says US stockpiles mean “wars can be fought ‘forever’”

In a late night post on Truth Social, Donald Trump said that the US munitions stockpiles “at the medium and upper medium grade, never been higher or better”.

He added that the US has a “virtually unlimited supply of these weapons”, meaning that “wars can be fought ‘forever’”.

This comes after Trump said that the US-Israel war on Iran could go beyond the four-five weeks that the administration initially predicted. The president also did not rule out the possibility of US boots on the ground in Iran during an interview with the New York Post on Monday.

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“I rebuilt the military in my first term, and continue to do so. The United States is stocked, and ready to WIN, BIG!!!,” he wrote.

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Key events

During his opening remarks, Senate judicicary committee chairman, Chuck Grassley, blamed Democrats for the ongoing shutdown Department of Homeland Security (DHS) but highlighted four agencies: the Secret Service, Federal Emergency Management Agency (FEMA), the Transportation Security Administration (TSA), and the Coast Guard.

Democrats are demanding tighter guardrails for federal immigration enforcement, but a sweeping tax bill signed into law last year conferred $75bn for Immigration and Customs Enforcement (ICE), which means the agency is still functional amid the wider department shuttering.

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Win McNamee/Getty Images

The Supreme Court on Monday intervened in New York’s redistricting process, blocking a lower court decision that would likely have flipped a Republican congressional district into a Democratic district.    
  
At issue is the midterm redrawing of New York’s 11th congressional district, including Staten Island and a small part of Brooklyn. The district is currently held by a Republican, but on Jan. 21, a state Supreme Court judge ruled that the current district dilutes the power of Black and Latino voters in violation of the state constitution.  
  
GOP Rep. Nicole Malliotakis, who represents the district, and the Republican co-chair of the state Board of Elections promptly appealed to the U.S. Supreme Court, asking the justices to block the redrawing as an unconstitutional “racial gerrymander.” New York’s congressional election cycle was set to officially begin Feb. 24, the opening day for candidates to seek placement on the ballot.  
  
As in this year’s prior mid-decade redistricting fights — in Texas and California — the Trump administration backed the Republicans.   
 
Voters and the State of New York contended it’s too soon for the Supreme Court to wade into this dispute. New York’s highest state court has not issued a final judgment, so the voters asserted that if the Supreme Court grants relief now “future stay applicants will see little purpose in waiting for state court rulings before coming to this Court” and “be rewarded for such gamesmanship.” The state argues this is an issue for “New York courts, not federal courts” to resolve, and there is sufficient time for the dispute to be resolved on the merits. 
  
The court majority explained the decision to intervene in 101 words, which the three dissenting liberal justices  summarized as “Rules for thee, but not for me.” 
 
The unsigned majority order does not explain the Court’s rationale. It says only how long the stay will last, until the case moves through the New York State appeals courts. If, however, the losing party petitions and the court agrees to hear the challenge, the stay extends until the final opinion is announced. 
 
Dissenting from the decision were Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Writing for the three, Sotomayor  said that  if nonfinal decisions of a state trial court can be brought to highest court, “then every decision from any court is now fair game.” More immediately, she noted, “By granting these applications, the Court thrusts itself into the middle of every election-law dispute around the country, even as many States redraw their congressional maps ahead of the 2026 election.” 

Monday’s Supreme Court action deviates from the court’s hands-off pattern in these mid-term redistricting fights this year. In two previous cases — from Texas and California — the court refused to intervene, allowing newly drawn maps to stay in effect.  
  
Requests for Supreme Court intervention on redistricting issues has been a recurring theme this term, a trend that is likely to grow.  Earlier last month  the high court allowed California to use a voter-approved, Democratic-friendly map.  California’s redistricting came in response to a GOP-friendly redistricting plan in Texas that the Supreme Court also permitted to move forward. These redistricting efforts are expected to offset one another.     
   
But the high court itself has yet to rule on a challenge to Louisiana’s voting map, which was drawn by the state legislature after the decennial census in order to create a second majority-Black district.  Since the drawing of that second majority-black district, the state has backed away from that map, hoping to return to a plan that provides for only one majority-minority district.    
     
The Supreme Court’s consideration of the Louisiana case has stretched across two terms. The justices failed to resolve the case last term and chose to order a second round of arguments this term adding a new question: Does the state’s intentional creation of a second majority-minority district violate the constitution’s Fourteenth and Fifteenth Amendments’ guarantee of the right to vote and the authority of Congress to enforce that mandate?    
Following the addition of the new question, the state of Louisiana flipped positions to oppose the map it had just drawn and defended in court. Whether the Supreme Court follows suit remains to be seen. But the tone of the October argument suggested that the court’s conservative supermajority is likely to continue undercutting the 1965 Voting Rights Act.   

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Map: Earthquake Shakes Central California

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Map: Earthquake Shakes Central California

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

A minor earthquake with a preliminary magnitude of 3.5 struck in Central California on Monday, according to the United States Geological Survey.

The temblor happened at 7:17 a.m. Pacific time about 6 miles northwest of Pinnacles, Calif., data from the agency shows.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Monday, March 2 at 10:20 a.m. Eastern. Aftershocks data is as of Monday, March 2 at 11:18 a.m. Eastern.

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